Automotive

Lease vs Finance for the first car

  • Last Updated:
  • Jan 18th, 2018 8:31 pm
[OP]
Newbie
Dec 23, 2016
47 posts
11 upvotes

Lease vs Finance for the first car

Hi all,

Planning to buy the first car in my life and debating whether I should lease or finance.

Considering SUV : Mazda CX-5, VW Tiguan 2018, or Nissan Rogue 2018 (No CRV or RAV4 on my list)

I have prepared $30k in cash aside for the car and originally thought to buy it in cash (and use HELOC to pay remaining balance)

Problem is I have no driving experience.. have had the license for a decade but never had my own car.

My friends are all saying it would be better to buy a cheap used car or lease a new car just in case I get into any sort of small/big accidents.

I don't like to drive the used car (personal preference..) and would definitely consider leasing if it's a better option.

I don't drive to work (only short drive to GO station, 5 mins away) and mainly for grocery and weekend leisure. I'm single so it's not a family car. (though I have a small dog..)

Would leasing be better option for me as a first car owner?

If leasing, I'm planning to put downpayment of more than 10k (or as much as I can as I already set $30k aside for car purchase)

I would like to reduce the risk of future liability caused by potential accidents so it sounds like a better option.

Of course, it will cost a bit more at the end compared to financing, but I'm not sure if I wanna drive the same car after 5,6 years.

Any suggestion?
Last edited by wcikkk on Dec 27th, 2017 12:27 am, edited 1 time in total.
90 replies
Deal Addict
Jan 8, 2007
2255 posts
747 upvotes
Calgary
If you decide to lease putting any money down is generally not a good idea. The whole point of lease is to get into something with at least up front money as possible. As you said, if you get into an accident you are exposing that 10k to risk. What's nice about a lease is you can give the car back with a huge accident claim on it and not worry about lowered resale value on it.
If you have someone take over your lease for whatever reason before lease end, your 10k will be next to impossible to recover.
With very low interest rates on leases these days the 10k will not save much in your interest charges over the lease term. You will be way better off investing your 10k somewhere else to make you a better return. That's unless your lease rate is really high in which case I would not lease that make/model anyways.
Deal Fanatic
User avatar
Oct 3, 2004
5777 posts
281 upvotes
To me this would be more of a financial decision. Leasing enables you to pay less monthly but you need to have a plan when the lease is up. Get a new one, finance the rest, buy it out or return it. That decision depends on your financial sitatuion and yiur personal need of a vehicle. You've gone this long without one, you sure you need one? The real cost of car ownership is in the maintenance, gas, insurance. If i had no family and work was close, i would not own a car.
Penalty Box
User avatar
Jul 11, 2008
4368 posts
1482 upvotes
Away from RFD idiots
If you decide to lease, put 0$ for downpayment.
..
Deal Expert
User avatar
Jul 22, 2006
21512 posts
2294 upvotes
Depends on YOU..

You are single but want a CUV why?
Sr. Member
Mar 17, 2016
810 posts
600 upvotes
Sounds like leasing would be the right choice for you since you're not planning on keeping the car for too long. Also you won't be driving much so a low mileage lease could save you money.

Do the math, see what promotions each dealer has, there should be some 0% leases out there and do not put any downpayment if you're leasing. Look up the email bomb technique on here + spend $20 on sites like unhaggle or carcostcanada to get invoice pricing on the car you're looking for.

Depending on a trim level you should be able to lease something in $300-$400/month range for 3-5 years.
Newbie
Nov 28, 2017
58 posts
16 upvotes
Hi!

Most oft he main points have already been explained, but I suggest:

1. Absolutely $0 down with a lease. keep your $30K and do something fun with it!
2. Don't worry about the car in case of an accident so much. Instead think about having a car that will protect you and your dog properly in case of an accident. Cars can be replaced - people and dogs can't!
3. Leasing can be be a good option if your monthly payments are a concern! Make sure you factor the monthly cost of insurance, gas, maintenance, etc... See where you stand with your ability to pay a monthly fee - then decide lease or finance. Mind you if you are putting down $30K on a finance for one of the cars you mention, your monthly payment should be the same or even less than a lease option.

Good luck,
Deal Addict
User avatar
Nov 25, 2014
2237 posts
638 upvotes
Toronto, ON
If you like to keep the car for a long time, finance is a better option. If you want a new car for every short years interval then lease. I went to finance since I want to keep my car for 10 years or longer and I like to set it up
[OP]
Newbie
Dec 23, 2016
47 posts
11 upvotes
Autobroker wrote:
Dec 27th, 2017 8:55 am
Hi!

Most oft he main points have already been explained, but I suggest:

1. Absolutely $0 down with a lease. keep your $30K and do something fun with it!
2. Don't worry about the car in case of an accident so much. Instead think about having a car that will protect you and your dog properly in case of an accident. Cars can be replaced - people and dogs can't!
3. Leasing can be be a good option if your monthly payments are a concern! Make sure you factor the monthly cost of insurance, gas, maintenance, etc... See where you stand with your ability to pay a monthly fee - then decide lease or finance. Mind you if you are putting down $30K on a finance for one of the cars you mention, your monthly payment should be the same or even less than a lease option.

Good luck,
Hi. Thanks for reply. Is there any reason I should put absolutely 0$ down payment?

I would like to pay minimum monthly payment so I thought bigger downpayment would be better. No?
Newbie
Nov 28, 2017
58 posts
16 upvotes
Hi!

Yes, whatever money you put down on a lease is money you will never see again! Putting money down will lower your payments, but will cost you the whole down payment down the road. This is because you don't own the vehicle!

Putting that kind of deposit on a finance will lower your monthly payments substantially and when ever you want a new car later down the road, you could sell it privately or trade it in and at least get back some of your down payment.

Hope that helps,
Deal Addict
User avatar
Jul 26, 2007
3901 posts
1594 upvotes
Toronto
If you must put down payments after all the warnings and advices, some dealers will reduce 0.5% lease interest rate per security payments equalling to monthly lease payment amount. So you can do like minus 3% if lease rate is 5% having paid in advance 6 payments.
Deal Addict
Mar 21, 2013
1239 posts
999 upvotes
EDMONTON
peteryorkuca wrote:
Dec 27th, 2017 1:08 pm
If you must put down payments after all the warnings and advices, some dealers will reduce 0.5% lease interest rate per security payments equalling to monthly lease payment amount. So you can do like minus 3% if lease rate is 5% having paid in advance 6 payments.
People act as if the money you pay when financing doesn't also become money you never see again as the vehicle depreciates.

Keep the money and 'do something fun with it' is the worst advice possible. If you can't reduce the lease rate with cash down, invest the money, don't spend any of it. That's the money you just set aside for your vehicle.
Penalty Box
User avatar
Apr 21, 2004
49220 posts
14553 upvotes
wcikkk wrote:
Dec 27th, 2017 11:29 am
Hi. Thanks for reply. Is there any reason I should put absolutely 0$ down payment?

I would like to pay minimum monthly payment so I thought bigger downpayment would be better. No?
Look at those on leasebuster who put a sizable down payment and can't get the person taking over to return part of that. :)
Member
Jan 26, 2010
270 posts
3 upvotes
myself have a quick dumb question:

if i put 15K down payment for lease to reduce my monthly payments.
what happens if my car is totaled in an accident ?
do i get my down payment back from insurance or they are gone ?

can anyone advsie...
Deal Addict
User avatar
Jul 26, 2007
3901 posts
1594 upvotes
Toronto
abydyby wrote:
Dec 27th, 2017 2:12 pm
myself have a quick dumb question:

if i put 15K down payment for lease to reduce my monthly payments.
what happens if my car is totaled in an accident ?
do i get my down payment back from insurance or they are gone ?

can anyone advsie...
If you paid monthly payment with no down payment and got your car totalled, your insurance would payout to the owner of the vehicle, in your case the leaser. After paying them, leaser could calculate the payout and what's owning the on the car, usually more as your lease payments should cover or in your case bigger payments due to down payments, but they never do and either offers to sign another lease or end it there.

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